Your numbers are wrong. The thrust of the Raptor has increased over time, and it currently has the same thrust as the SLS RS-25 engines, which cost $100M each, while a Raptor costs $200,000.

Also, the current Starship system is not the final design. The ship that blew up in test flight 7 was a new design. This is still very early in the development - they are not "refining". What they are doing is proving each capability.

I agree that more ground testing should have been done on the new ship design, but that's a separate issue. The system is not a failure. Far from it.